Officials in Highland Park want the state of Michigan to review the city's finances.
The move could be the first step towards appointing an emergency manager over Highland Park, or the city declaring bankruptcy.
Highland Park owes about $20 million for water and sewage service, and officials say the city does not have enough funding to repay that debt.
The Highland Park City Council is requesting a financial review from the state, which could lead to mediation, a consent decree, even possibly emergency management or bankruptcy.
In addition, other communities contracted with the Great Lakes Water Authority say they should be reimbursed for covering Highland Park's past-due bills.
Michigan Governor Gretchen Whitmer says she is working with the state treasurer to determine options for Highland Park's finances.